Ford announces deep production cuts in response to growing losses

Saturday, August 19, 2006

Ford has announced sweeping cuts of 21% (168,000 units) in its US and Canadian production, resulting in the partial closure of ten of its plants during the fourth quarter. The measure comes on top of existing turnaround plans announced in January, in which 25,000 to 30,000 positions should be cut and 14 plants closed by 2012.

Ford is the world’s third-largest automaker and the U.S.’s second-largest. However it has in recent years been struggling with poor profitability and shrinking market shares. In 2005 it lost $1.6 billion and recently the company reported a second quarter loss of $254 million and a 34% year-year decline in sales for the month of July.

George Pipas, director of sales analysis at Ford, points to rising gas prices having negative impact on the sale of the companies SUV lines as well as its sales leader, the F-series pickup truck as being the direct cause of the latest initiative.

So far the following plants are thought to be affected: